Our country has seen tremendous growth in inflation rates across all industries, and although we may be nearing the peak, the end may still take some time. High prices have affected purchasing power and changed the way we buy and sell. Business owners have had to compete with the inflation rates by raising prices, changing vendors or closing their doors for good.
No matter the timing of this inflation downfall, business owners should be considering ways to minimize added costs in 2023. To save your business extra costs this year, consider these six tips to minimize 2023 business costs.
1. Create a Budget and Strategic Plan
Developing a strong budget is an essential tool for minimizing your business expenses. Once you have a gauge of your annual revenue, cash flow, profits and losses and general expenses with suppliers/distributors, you can make informed financial decisions. Properly utilizing your budget can help determine which areas of your business need improvement and which are running efficiently. Your budget can and should include numerous items such as overhead (utilities, insurance, advertising, payroll, etc.), although it should also help you plan for business strategy.
To create a well-built budget for your business, contemplate implementing a strong strategic plan with specific financial goals to help your business thrive. A strategic plan showcases what your businesses’ short-term and long-term objectives are and concrete ways to achieve success in those defined goals. Objectives of a strategic plan should outline your business plans, and also your budget goals. Having these objectives within your strategic plan will provide the organizational direction needed to achieve overall success.
After your strategic plan is in place, creating a strong annual budget will be much easier to visualize and adhere to. For assistance in developing a budget for your business, reach out to one of our Trusted Advisors who specialize in advisory services, such as strategy and planning.
2. Use the Right Equipment/Technology
Although saving money is the end game, sometimes you have to spend in the short-term to save in the long-term. Investing in efficient office equipment with multiple user segments, high-speed functionality and a long-lasting lifespan could save hundreds of dollars in future replacements. Furthermore, having high-performing technology leads to higher efficiency. In addition to investing in quality equipment. you should also consider investing in quality software. Good equipment and software go hand-in-hand by offering a smooth, streamlined experience for all of your employees. One way to save on technology is to invest in a cloud-based service. Cloud-based services are generally more affordable than a physical server and save you additional costs on maintenance to your hardware drives. Having a cloud-based server also gives you peace of mind if a disaster were to strike, as being an intangible digital platform, your information is secure forever.
Another often overlooked element of minimizing business costs is cybersecurity to protect your software and data. Businesses lose millions of dollars every year to cyber-attacks, so having the proper protection in place can save you the headache of catastrophic data and financial losses. Start with implementing cybersecurity measures—antivirus and ransomware—and then add a disaster recovery plan to keep your business running in the event you experience a cyberattack.
3. Focus on Modern Marketing
Marketing consumes our daily lives without us even realizing it, such as the 10 billboards you pass on your way to work, the radio ad you heard twice this week or the 15-second clip before your YouTube video starts. The majority of these ads are paid advertising, and although they can be beneficial to your business, there are some lower cost options.
One of the lowest-cost marketing tactics you can employ is to invest time and resources into your social media presence. Choose which platforms work best for your business and develop a solid marketing plan for those platforms. This could look like a few social posts a week and boosted posts to your ideal target audiences. According to WeAreSocial and Hootsuite, social media users grew by 190 million over the past year, reaching a total of 4.74 billion at the start of October 2022. Utilizing your social media channels can help grow your reach farther than ever before when properly utilized.
Another way to apply modern marketing trends is to network. Attending events, attaching a face to your business and meeting others in your community can help grow your word-of-mouth following. Customers are more likely to work with you if they recognize you or your business’s name. Social media can help spread the word, yet how you interact with your community can make an even larger impact—all at a fraction of the cost of other marketing tactics.
4. Go Paperless
If not already implemented in your business plan, now is a great time to begin transitioning your business to paperless operations. Research different online invoice and bill pay systems and how digital can significantly reduce your operation costs. Using an online filing system could benefit both you and your employees by saving on postage and diminishing the hassle of filing paper forms. Online filing systems give you unlimited access to download and file, which provides safety from rare, yet devastating, natural disasters that easily destroy hard copies of crucial documents. Additionally, many paperless systems provide a digital portal to things like forms, checklists, pay stubs, tax documents and anything else you would need all in one convenient location.
5. Evaluate your Office Space
Think of how your business operates: do you need a physical location? If the answer is no, don’t waste extra cash to buy or rent space. Through the pandemic, people have changed the way they work; whether they are 100% remote working from home or in a hybrid environment, people are less likely to be in the office full-time. Consider this concept for your business. Can you effectively run your business from home? Or, could you share a workspace with others?
If your business needs a physical location to perform work duties, find ways to reduce the costs associated with the space. Regarding your utility bills, consider switching to energy-saving smart outlets that turn off the energy flow once the outlet is not in use. Or, set annual budgets for each department to spend on their necessary equipment. Monitoring all expenses could help you save on unnecessary purchases in the future. As mentioned above, another way to reduce costs is to share a workspace with others. This could look like utilizing only an upper/lower level of a building and renting out one portion to another business.
6. Consider Outsourcing Human Resources
A strong human resources function plays a critical role in your business’ success, and it’s important to determine which HR strategies best suit your needs. Your business can either leverage an in-house HR team or outsource there mission critical needs to an external organization.
Outsourcing to external HR resources can provide your business with access to industry best practices, effective time management, expertise on efficiency and productivity, coaching and leadership development resources and extensive recruitment power. By investing in outsourced HR resources, you’ll save costs on internal salaries and free up your current team members to focus on their specific skills/strengths.
An HR expert could help your business minimize costs by fulfilling these key HR functions:
- Employing the right people in the right positions. It’s more than just managing employee relations, HR experts can also ensure you have the right people for the right job, which increases efficiency and production, saving you money and growing your business. The cost of a bad hire can be up to 30% of the individual’s first-year earnings, when taking into account training and relocation, company downtime and potential negative effects to both staff and customers.
- Succession Planning. Effective planning and leadership coaching is an insurance policy on the continued stability and growth of your organization. Without it, there can be months of time, effort and resources spent making guesses at the next right move if the unforeseen happens. These planning strategies put you years ahead of the situation and the competition.
- Recruiting. Filling positions crucial to your strategic plan and your business’s success is one of the most often outsourced HR functions. Leveraging the broad reach and network of a professional recruiter saves time, internal resources and gives you visibility on the best talent the market has to offer. Timelines are shortened, and placements are guaranteed giving you one of the best ROI in the outsourced HR services world.
Once your business has invested time in an efficient HR resource, your current employees can flourish in their niche areas. A dedicated HR resource offers your staff more opportunities to focus on areas they specialize in, which ultimately fuels your business for success.
If you would like to explore the benefits of outsourcing Human Resources, reach out to one of our Trusted Advisors. We will work with you to determine which services can best benefit your business strategies and goals.
Utilizing these tools to save your business extra costs in 2023 may give you some padding for your budget as we continue through another year of economic uncertainty. Utilize 2023 to prioritize needed costs versus extra expenses to ensure you accomplish your business goals. If you need further assistance towards developing your budget or financial goals, our team at KerberRose is ready to assist you. Reach out today for business guidance.